The Relationship between Financial Development and Renewable Energy Consumption in South Asian Countries

Abstract We analyse how the financial development and green energy use are linked to the countries of South Asia from 1990 to 2018. Domestic credit to the private sector and renewable energy consumption is being used in this paper as indicators of financial development and the use of renewable energy. On the indication of cross-sectional dependency among the variables of the models, we apply second generation panel unit root tests and cointegration tests to check the stationarity properties and long-run cointegration relation among the variables. We find that variables are stationary at the first difference, and long-run cointegration exists. By applying robust dynamic heterogeneous and cross-section augmented estimators, we find that increase in GDP increases renewable energy consumption by 1.56-0.50%; however reduces by 0.07-0.03% after certain thresholds. Furthermore, increase in financial development, on average, reduces the propensity of renewable energy consumption by 0.15-0.07% in the long-run. On the other hand, the Dumitrescu-Hurlin panel causality test shows a unidirectional relationship from GDP to financial development and financial development to renewable energy consumption but not vice versa. We suggest that the selected countries revisit and restructure the renewable energy policy and emphasise institutional reforms to strengthen renewable energy development in the upcoming years.

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Renewable and non-renewable energy consumption and economic growth in the US: A Markov-Switching VAR analysis

Energy & Environment ◽

10.1177/0958305x20944035 ◽

2020 ◽

pp. 0958305X2094403

Author(s):

Emrah Ismail Cevik ◽

Durmuş Çağrı Yıldırım ◽

Sel Dibooglu

Keyword(s):

Economic Growth ◽

Renewable Energy ◽

Energy Consumption ◽

Energy Demand ◽

Fossil Fuels ◽

The United States ◽

Renewable Energy Consumption ◽

Causality Test ◽

Long Run ◽

The Us

We examine the relationship between renewable and non-renewable energy consumption and economic growth in the United States. While the regime-dependent Granger causality test results for the non-renewable energy consumption and economic growth suggest bi-directional causality in both regimes, we cannot validate any causality between renewable energy consumption and economic growth. The US meets its energy demand from non-renewable sources; as such, renewable energy consumption does not seem to affect economic growth. Given the efficiency and productivity of renewable energy investments, we conclude that it is worthwhile to consider renewable energy inputs to replace fossil fuels given potential benefits in terms of global warming and climate change concerns. In this regard, increasing the R&D investments in the renewable energy sectors, increases in productivity and profitability of renewable energy investments are likely to accrue benefits in the long run.

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Economic growth, renewable and nonrenewable energy consumption nexus in India

International Journal of Energy Sector Management ◽

10.1108/ijesm-06-2019-0016 ◽

2020 ◽

Vol 14 (4) ◽

pp. 777-792 ◽

Cited By ~ 1

Author(s):

Shruti Shastri ◽

Geetilaxmi Mohapatra ◽

A.K. Giri

Keyword(s):

Economic Growth ◽

Renewable Energy ◽

Energy Consumption ◽

Renewable Energy Consumption ◽

Causality Test ◽

Content Type ◽

Long Run ◽

The Impact ◽

Asymmetric Causality ◽

Nonrenewable Energy

Purpose The purpose of this paper is to examine the nexus among economic growth, nonrenewable energy consumption and renewable energy consumption in India over the period 1971-2017. Design/methodology/approach This study uses nonlinear autoregressive distributed lags model and asymmetric causality test to explore nonlinearities in the dynamic interaction among the variables. Findings The findings indicate that the impact of nonrenewable energy consumption and renewable energy consumption on the economic growth is asymmetric in both long run and short run. In long run, a positive shock in nonrenewable energy consumption and renewable energy consumption exerts a positive impact on growth. However, the negative shocks in nonrenewable energy consumption produce larger negative effects on the growth. The results of nonlinear causality test indicate a unidirectional causality from nonrenewable energy consumption and renewable energy consumption to economic growth and thus support “growth hypothesis” in context of India. Practical implications The findings imply that policy measures to discourage nonrenewable energy consumption may produce deflationary effects on economic growth in India. Further, the findings demonstrate the potential role of renewable energy consumption in promoting economic growth. Originality/value To the best of the authors’ knowledge, this study is the first attempt to explore nonlinearities in the relationship between economic growth and the components of energy consumption in terms of renewable and nonrenewable energy consumption.

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Renewable and non-renewable energy consumption, economic growth and carbon emission in BRICS

International Journal of Energy Sector Management ◽

10.1108/ijesm-02-2019-0007 ◽

2020 ◽

Vol 14 (1) ◽

pp. 248-260 ◽

Cited By ~ 5

Author(s):

Umer Jeelanie Banday ◽

Ranjan Aneja

Keyword(s):

Economic Growth ◽

South Africa ◽

Renewable Energy ◽

Energy Consumption ◽

Gdp Growth ◽

Renewable Energy Consumption ◽

Causality Test ◽

Cross Sectional ◽

Content Type ◽

Growth Hypothesis

Purpose The purpose of this study is to find the causal relationship among energy consumption (renewable energy and non-renewable energy), gross domestic product (GDP) growth and carbon dioxide (CO2) emission for Brazil, Russia, India, China and South Africa for the period of 1990-2017. Design/methodology/approach The study uses bootstrap Dumitrescu and Hurlin panel causality test, which accepts heterogeneity and dependency in cross-sectional units across emerging countries. Findings The results find unidirectional causality from GDP to CO2 for India, China, Brazil, South Africa and no causality for Russia. The causality results from renewable energy consumption to GDP show that there is evidence of feedback hypothesis for China and Brazil, growth hypothesis for Russia, conservation hypothesis for South Africa and neutrality hypothesis for India. However, the results accept growth hypothesis for India, China, Russia, Brazil and neutrality hypothesis for South Africa. In the case of renewable energy and non-renewable energy consumption to CO2 emission, the results find convergence in India, Russia and South Africa and divergence in China and Brazil. Originality/value It is the first study that investigates the part of balanced economic growth, instead of simply financial development in those economies. Numerous studies have used diverse factors such as economic development, renewable energy, non-renewable energy and CO2 emission; however, the examination has used total GDP growth rate, energy consumption and CO2 emissions.

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Nexus between Economic Policy Uncertainty and Renewable Energy Consumption in BRIC Nations: The Mediating Role of Foreign Direct Investment and Financial Development

Energies ◽

10.3390/en14154687 ◽

2021 ◽

Vol 14 (15) ◽

pp. 4687

Author(s):

Yongliang Zhang ◽

Md. Qamruzzaman ◽

Salma Karim ◽

Ishrat Jahan

Keyword(s):

Renewable Energy ◽

Energy Consumption ◽

Financial Development ◽

Direct Investment ◽

Clean Energy ◽

Policy Uncertainty ◽

Energy Integration ◽

Renewable Energy Consumption ◽

Long Run

In recent literature, the impact of economic policy uncertainty (EPU) on macro aspects have been investigated, but the aspect of energy, precisely renewable energy still to explore. The motivation of the study is to produce fresh evidence regarding the nexus between EPU and renewable energy consumption (REC) with the mediating role of forcing direct investment (FDI) and financial development (FD) in BRIC nations for the period 1997q1–2018q4. The study applied unit root tests following Ng-Perron and Zivot and Andrews for detecting variable’s stationary properties. The long-run cointegration was evaluated by implementing Bayer, Hanck combined the cointegration test, Bound testing approach, and tBDM test. Both linear and non-linear ARDL were implemented to evaluate long-run and short-run shocks, and directional causality was assessed through a non-granger causality test. Furthermore, the study implemented robustness by implementing fully-modified OLS, dynamic OLS, and canonical cointegrating regression (CCR). Unit root test established the variables are stationary after the first difference; moreover, the Bayer and Hanck cointegration test confirmed the long-run association between EPU, FD, FD, and REC in BRIC nations. Accruing to ARDL estimation, adverse effects running from EPU to REC both in the long run and short run. Furthermore, the positive statistically significant linkage revealed for FDI and FD to REC implies that clean energy integration could be augmented with continual inflows of FDI and development of the financial sector. Model estimation with asymmetric assumption, the study documented asymmetric effects running from EPU, FDI, and FD to renewable energy consumption, especially in the long run. Finally, the directional causality revealed unidirectional causality between REC and EPU, whereas the feedback hypothesis was disclosed for FDI and REC] and FD and REC. Study findings postulated that the role of foreign direct investment and financial development is critically significant because technological advancement and capital investment augment clean energy integration through the application of renewable energy.

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Nexus between Financial Development, Renewable Energy Consumption, Technological Innovations and CO2 Emissions: The Case of India

Energies ◽

10.3390/en14154505 ◽

2021 ◽

Vol 14 (15) ◽

pp. 4505

Author(s):

Muhammad Qayyum ◽

Minhaj Ali ◽

Mir Muhammad Nizamani ◽

Shijie Li ◽

Yuyuan Yu ◽

...

Keyword(s):

Renewable Energy ◽

Energy Consumption ◽

Least Squares ◽

Co2 Emissions ◽

Financial Development ◽

Ordinary Least Squares ◽

Technological Innovations ◽

Renewable Energy Consumption ◽

Long Run ◽

New Findings

Concerns regarding environmental sustainability have generally been an important element in achieving long-term development objectives. However, developing countries struggle to deal with these concerns, which all require specific treatment. As a result, this study explores the interaction between financial development, renewable energy consumption, technological innovations, and CO2 emissions in India from 1980 to 2019, taking into account the critical role of economic progress and urbanization. The Autoregressive Distributed Lag (ARDL) model is used to quantify long-run dynamics, while the Vector Error Correction Model is used to identify causal direction (VECM). According to the study’s conclusions, financial development has a considerable positive impact on CO2 emissions. The coefficient of renewable energy consumption and technical innovations, on the other hand, is strongly negative in both the short and long run, indicating that increasing these measures will reduce CO2 emissions. Furthermore, economic expansion and urbanization have a negative impact on environmental quality since they emit a significant amount of CO2 into the atmosphere. The results of the robustness checks were obtained using the Fully Modified Ordinary Least Squares (FMOLS), the Dynamic Ordinary Least Squares (DOLS), and the Canonical Cointegration Regression (CCR) approaches to verify the findings. The VECM results reveal that there is long-run causality in CO2 emissions, financial development, renewable energy utilization, and urbanization. A range of diagnostic tests were also used to confirm the validity and reliability. This study delivers new findings that contribute to the existing literature and may be of particular interest to the country’s policymakers in light of the financial system and its role in environmental issues.

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What determines renewable energy consumption? Startling evidence from Ghana

International Journal of Energy Sector Management ◽

10.1108/ijesm-12-2019-0019 ◽

2020 ◽

Vol ahead-of-print (ahead-of-print) ◽

Author(s):

Paul Adjei Kwakwa

Keyword(s):

Renewable Energy ◽

Energy Consumption ◽

Financial Development ◽

Empirical Studies ◽

Carbon Dioxide Emission ◽

Future Research ◽

Total Energy Consumption ◽

Renewable Energy Consumption ◽

Content Type ◽

Long Run

Purpose Owing to the adverse effect of carbon dioxide emission, there have been calls for economies to rely on (cleaner) renewable energy. Although empirical studies on the subject matter abound the conflicting outcome, the less attention paid to combustible renewable and waste, and the little empirical evidence of the effect of financial development and industrialization on renewable energy consumption necessitate further studies. This study aims to examine the drivers of renewable energy consumption for Ghana whose share of renewable energy consumption in the total energy consumption has been reducing over the past decade, with fossil fuel consumption remaining high. Design/methodology/approach Based on the demand theory and empirical studies, the paper models total renewable energy consumption and combustible renewables and waste as a function of income, price, financial development and industrialization. Regression and variance decomposition techniques were used to analyze the data. Findings Ghana’s renewable energy consumption is positively influenced by industrialization, but negatively influenced by price, income and financial development in the long run, while in the short run, industrialization and financial development affect renewable energy consumption. Research limitations/implications The findings imply that the transition to cleaner energy is not a matter of income level alone. Future research should investigate the drivers of other renewable energy consumption and the possible challenges to green finance in Ghana’s financial sector. Originality/value The effect of financial development and industrialization on renewable energy consumption is examined. Previous econometric analyses have also focused on total renewable energy, but this study adds combustible renewable and waste to the analysis.

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Modeling the Relationship Between Economic Complexity and Environmental Degradation: Evidence From Top Seven Economic Complexity Countries

Frontiers in Environmental Science ◽

10.3389/fenvs.2021.744781 ◽

2021 ◽

Vol 9 ◽

Author(s):

José Moleiro Martins ◽

Tomiwa Sunday Adebayo ◽

Mário Nuno Mata ◽

Seun Damola Oladipupo ◽

Ibrahim Adeshola ◽

...

Keyword(s):

Economic Growth ◽

Renewable Energy ◽

Energy Consumption ◽

Causal Connection ◽

Renewable Energy Consumption ◽

Causality Test ◽

Continuous Growth ◽

Economic Complexity ◽

Long Run

The continuous growth in CO2 emissions of nations around the globe has made achieving the aim of sustainable development extremely challenging. Therefore, the current research assesses the connection between CO2 emissions and economic complexity in the top 7 economic complexity countries while taking into account the role of economic growth, renewable energy consumption, and globalization for the period between 1993 and 2018. The research aims to answer the following questions: 1) What is the association between CO2 and the regressors in the long-run? 2) What are the effects of renewable energy consumption, economic growth, economic complexity, and globalization on CO2 emissions? The research utilized the CS-ARDL, CCEMG and panel causality approaches to investigate these interconnections. The empirical outcomes revealed that economic growth and economic complexity increase CO2 emissions while renewable energy consumption and globalization mitigate CO2 emissions. The outcomes of the causality test revealed a feedback causal connection between economic growth and CO2, while a unidirectional causality was established from economic complexity, globalization and renewable energy consumption to CO2 emissions in the top 7 economic complexity countries.

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Do Public–Private Partnership Investment in Energy and Technological Innovation Matter for Environmental Sustainability in the East Asia and Pacific Region? An Application of a Frequency Domain Causality Test

Sustainability ◽

10.3390/su13063039 ◽

2021 ◽

Vol 13 (6) ◽

pp. 3039

Author(s):

Tomiwa Sunday Adebayo ◽

Sema Yılmaz Genç ◽

Rui Alexandre Castanho ◽

Dervis Kirikkaleli

Keyword(s):

Renewable Energy ◽

Energy Consumption ◽

Frequency Domain ◽

Co2 Emissions ◽

Technological Innovation ◽

Environmental Sustainability ◽

Public Private Partnership ◽

Renewable Energy Consumption ◽

Causality Test ◽

Private Partnership

Environmental sustainability is an important issue for current scholars and policymakers in the East Asian and Pacific region. The causal and long-run effects of technological innovation, public–private partnership investment in energy, and renewable energy consumption on environmental sustainability in the East Asian and Pacific regions have not been comprehensively explored while taking into account the role of economic growth using quarterly data for the period 1992–2015. Therefore, the present study aims to close this literature gap using econometric approaches, namely Bayer–Hanck cointegration, autoregressive distributed lag (ARDL), dynamic ordinary least square (DOLS), and fully modified ordinary least square (FMOLS) tests. Furthermore, the study utilizes the frequency domain causality test to capture the causal impact of public–private partnership investment in energy, renewable energy consumption, technological innovation, and economic growth on CO2 emissions. The advantage of the frequency domain causality test is that it can capture the causality between short-term, medium-term, and long-term variables. The outcomes of the ARDL, FMOLS and DOLS show that renewable energy consumption and technological innovation mitigate CO2 emissions, while public–private partnership investment in energy and economic growth increase CO2 emissions. Moreover, the frequency causality test outcomes reveal that technological innovation, public–private partnership investment in energy, and renewable energy consumption cause CO2 emissions, particularly in the long-term. Thus, as a policy recommendation, the present study recommends promoting renewable energy consumption by focusing more on technological innovation in the East Asia and Pacific regions.

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